Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
Speaker 1: global economy to you. You probably feel like you've already
Speaker 1: heard plenty about the COP twenty six climate change conference
Speaker 1: in Glasgow the other day. If you've been paying attention,
Speaker 1: you may also remember some of the other COP meetings
Speaker 1: COP twenty one in Paris, and I'll bet you know
Speaker 1: that one. Also memorable for some was COP fifteen in
Speaker 1: Copenhagen a few years before. That considered a bit of
Speaker 1: a flop. But President Biden's Special Envoy on Climate, John Kerry,
Speaker 1: has been at this game so long. He was at
Speaker 1: the Earth Summit in Rio in which led to the
Speaker 1: COP process in the first place. So I was fascinated
Speaker 1: to get his long view on COPY when I spoke
Speaker 1: to him on the last day of the New Economy
Speaker 1: Forum last week. I also watched to find out what
Speaker 1: that much trumpeted US China statement on climate cooperation was
Speaker 1: actually going to achieve. He negotiated it, after all. We
Speaker 1: have an edited version of that conversation in a little while.
Speaker 1: I'll also be asking our Eurozone economist may VERA. Kusa,
Speaker 1: why decarbonizing the economy could be a recipe for higher inflation.
Speaker 1: But first something very different and important and thoughtful report
Speaker 1: from Frankfurt based economy reporter Carolyn look on a subject
Speaker 1: we haven't touched on before here on stephanomics, the economic
Speaker 1: impact of violence against women. I should warn you this
Speaker 1: piece does discuss experiences of domestic violence, medicraft, and I
Speaker 1: don't have the energy and courage I once had, even
Speaker 1: after a thousand therapies. It's broken and it's horrible because
Speaker 1: that's something to have to live with. You can't change it.
Speaker 1: Tanya is vivacious, adventurous, has an infectious laugh. In her
Speaker 1: own words, She's a tough woman, one who worked many
Speaker 1: different jobs when she was younger, first as a medical assistant,
Speaker 1: than as an alternative medical practitioner, and later organizing events
Speaker 1: and concerts in her native Hamburg. She always dreamed of
Speaker 1: leaving Germany and moving abroad, and, like many of us,
Speaker 1: of being cared for. She thought she found that when
Speaker 1: she met her ex boyfriend about two decades ago. He
Speaker 1: was eight years her senior and seemed like the first
Speaker 1: man who really loved her. Now fifty two, Tanya realizes
Speaker 1: it wasn't all that it seemed. Though. Tanya is not
Speaker 1: her real name, which we've changed for her protection. In
Speaker 1: I wasn't the first woman he beat up or was
Speaker 1: violent against. There were apparently a few before me, and
Speaker 1: he tell people in advance that I was mentally ill
Speaker 1: and hysterical, just so that when he beat me up
Speaker 1: he could say, yeah, I told you she's crazy. The
Speaker 1: abuse began early in their relationship. Tanya broke up with
Speaker 1: him at one point, but gave him a second chance.
Speaker 1: They eventually decided to leave Germany and live in a
Speaker 1: mobile home on the Greek island of Crete, which for
Speaker 1: many would seem like a romantic adventure, but while there,
Speaker 1: he locked her up, beat her, and later abandoned her
Speaker 1: on a beach, leaving her desperate and helpless in a
Speaker 1: foreign country with few avenues for support. She felt she
Speaker 1: had no choice but to return to Germany with him,
Speaker 1: and it was only there that she managed to end
Speaker 1: the two year nightmare when a colleague gave her a
Speaker 1: place to stay. The violence Tanya had to experience is
Speaker 1: unfortunately far from rare. One in three women experienced some
Speaker 1: form of physical or sexual violence by an intimate partner
Speaker 1: or non partner, according to the World Health Organization. While
Speaker 1: the issue is sometimes framed as a personal issue and
Speaker 1: one that's more common in developing countries, It's actually pervasive
Speaker 1: across countries and carries deep emotional and economic costs, both
Speaker 1: for victims and for wider society. Companies have started waking
Speaker 1: up to this fact after a number of studies showed
Speaker 1: how domestic abuse incurs both direct and indirect costs for
Speaker 1: the economy, beyond the already substantial legal bills, health and
Speaker 1: shelter costs. Victims naturally lose productivity when they suffer domestic abuse,
Speaker 1: or might miss work altogether. In two thousand nineteen, Vodafone
Speaker 1: became the first company to offer ten days of paid
Speaker 1: leave to victims, and this year Facebook followed with twenty
Speaker 1: days of paid leave. Here's chief operating officer Cheryl Sandberg
Speaker 1: speaking on the day the policy was announced. This is
Speaker 1: something that affects everyone, including our employees. It's a situation
Speaker 1: where you need paid time off, and not just for yourself,
Speaker 1: but for a loved one. And we're hoping, we're hoping that,
Speaker 1: um this is a problem other companies will start tackling
Speaker 1: as well. A huge part of the problem, as Tanya's
Speaker 1: case showed, is that attitudes in the workplace are often
Speaker 1: a huge deterrent to getting support in the first place.
Speaker 1: When she left her violent partner, several of her male
Speaker 1: colleagues initially took turns driving her to and from work
Speaker 1: to keep her safe, but none of them actually talked
Speaker 1: to her, she says, or seemed to care very much. Eventually,
Speaker 1: her boss began harassing her and she had to quit
Speaker 1: her job. After my experience with domestic violence, I wanted
Speaker 1: to make decisions for myself. I didn't want to be
Speaker 1: an employee somewhere and let someone have power over Nowadays,
Speaker 1: Tanya as a freelance designer. It doesn't pay much, but
Speaker 1: she'd rather do that than share control with a workplace
Speaker 1: that doesn't have her best interests in mind. Employers could
Speaker 1: actually do a lot to help victims. After all, where
Speaker 1: we work is where we spend one of the largest
Speaker 1: portions of our time. That's according to Jane Pillinger, an
Speaker 1: independent gender expert who worked with the u N and
Speaker 1: it's International Labor organization on domestic violence policy. One of
Speaker 1: the really interesting things from the work that I've been
Speaker 1: involved in with trade unions and with companies across the
Speaker 1: world is just how relevant it is to be doing
Speaker 1: awareness raising in the workplace, giving people the tools to
Speaker 1: spot the signs, to communicate with somebody who's who's experiencing
Speaker 1: domestic abuse, because you might not be able to solve
Speaker 1: the problem, but you can open the door to helping
Speaker 1: somebody take the first step to surviving to mystic abuse.
Speaker 1: In Germany, where Tanya is from, flawed attitudes about partner
Speaker 1: violence run deep. A recent study by an organization called
Speaker 1: front Line one hundred surveyed hundreds of business owners, managers,
Speaker 1: and executives and showed that one in four believed that
Speaker 1: there are reasons that can justify physical violence against a partner.
Speaker 1: The survey respondents, who were mostly men, most often selected
Speaker 1: reasons such as not completing one's housework or refusing to
Speaker 1: have sex with the other as justifying such violence. German
Speaker 1: women's attitudes are just as concerning. Nearly twenty of women
Speaker 1: consider a husband to be justified in hitting or beating
Speaker 1: his wife, according to a two thousan c D report.
Speaker 1: That's more than in any other country in Europe. The
Speaker 1: bottom line of all this is that blindness towards the
Speaker 1: troubling in sequences of domestic abuse is costing economies billions.
Speaker 1: The European Institute for Gender Equality estimates that the cost
Speaker 1: of gender based violence across the European Union is three
Speaker 1: hundred sixty six billion euros a year. Sylvia Sako, a
Speaker 1: professor at the Brandenburg University of Technology, has studied the
Speaker 1: cost of domestic violence in Germany and says that companies
Speaker 1: need to do much more to stand up for victims.
Speaker 1: Here she is discussing one case she was involved in
Speaker 1: in which a female stalking victim spent years trying unsuccessfully
Speaker 1: to get help. You have done on She already exhausted
Speaker 1: all sorts of police measures and everything was unsuccessful. She
Speaker 1: then lost her job. She became chronically ill for a
Speaker 1: long time, and then years later turned to the employer
Speaker 1: of the stalker. I eat the perpetrator and asked him
Speaker 1: for a conversation. The perpetrator's boss ended up confronting his
Speaker 1: employee about his actions, and it was only then that
Speaker 1: the starking finally stopped after years of trying to get help.
Speaker 1: Here's Jane Pillinger again. I suppose you know a lot
Speaker 1: of employers have said, why is it my responsibility, it's
Speaker 1: a private issue in the home. Well, it's it is
Speaker 1: a private issue in the home, but you know it
Speaker 1: spills over into the workplace, and that's the issue for
Speaker 1: Bloomberg News. I'm Caroline luck Are now as advertised, here's
Speaker 1: that conversation with Presidential Special Envoy on Climate Change John
Speaker 1: Kerry for the Bloomberg New Economy Forum. One of the
Speaker 1: I guess relatively few positive surprises out of the Glasgow
Speaker 1: Summit was the US China Joint Glasgow Declaration on Climate
Speaker 1: enormous symbolic significance. Clearly there haven't been a lot of
Speaker 1: joint US China or anything for a while. But what
Speaker 1: practical difference when we look at the words in that document,
Speaker 1: what practical difference are they going to make to the
Speaker 1: battle to contain climate change? Stephanie, the China Agreement is,
Speaker 1: in fact, I think significant. I'm not saying that because
Speaker 1: negotiated it with Shia Jama, who is a long time
Speaker 1: associate and friend. He and I know each other quite
Speaker 1: well over twenty plus years UM and we've worked at this, uh,
Speaker 1: this issue. UH. The agreement is five pages that lay
Speaker 1: out our cooperative effort not just on methane and CEO two,
Speaker 1: but also on deforestation and the creation of a working
Speaker 1: group between our two countries which we are now immediately
Speaker 1: going to begin to activate. And I hope that our
Speaker 1: working together will increase the sharing of data, increase the
Speaker 1: sharing of of options, and begin to engage us in
Speaker 1: a very important dialogue with the top leadership of both
Speaker 1: of our countries. UM And and that's our hope. But importantly,
Speaker 1: the agreement is quite specific in addressing methane with a
Speaker 1: specific date for action. And the pledge is that we
Speaker 1: will reduce methane by on a global basis, which doesn't
Speaker 1: mean any individual country is doing the percent, but in
Speaker 1: contributed global aggregation we will get a thirty percent reduction
Speaker 1: on a global basis. And and trying to agreed UM
Speaker 1: to work with us to lay out an ambitious these
Speaker 1: these are the words AMBITI a national action plan which
Speaker 1: China must submit and and begin acting on by copy
Speaker 1: seven a year from now in uh in Charmel Shake.
Speaker 1: So if we were to do the thirty percent reduction
Speaker 1: of methane on a global basis by as Fati Birol
Speaker 1: of the I e A has made clear to us,
Speaker 1: that is the equivalent of taking all the cars of
Speaker 1: the world, all the trucks of the world, all the
Speaker 1: ships of the world, all the planes of the world
Speaker 1: to zero emissions. By so you can get a sentence
Speaker 1: of the enormity of what the reduction of methane can mean.
Speaker 1: It's about a point to degree reduction in the rise
Speaker 1: of the Earth's temperature and it's the single biggest, fastest
Speaker 1: grab that we can make for dealing with this problem.
Speaker 1: The third thing that the agreement does is sets a
Speaker 1: date currently for when China, in the commencement of its
Speaker 1: fifteen five year plant, begins to phase down the consumption
Speaker 1: of coal and does so with an agreement with us
Speaker 1: that together we will work to make best efforts to
Speaker 1: accelerate the reduction the phase out of coal. So all
Speaker 1: of what we do in Glasgow, or did in Glasgow
Speaker 1: obviously results in words reduced to paper, but that is
Speaker 1: what brought us to Glasgow, that is what resulted in
Speaker 1: the submission of a National Determined Contributions or n d
Speaker 1: c s the production of emissions. It's the words translated
Speaker 1: into actions that actually resulted in our committing to additional
Speaker 1: funds forty a doubling of the amount of money that
Speaker 1: goes into adaptation of significant recognition of the challenge of
Speaker 1: loss and damages with the beginning of a dialogue that
Speaker 1: will take place over the next year to figure out
Speaker 1: how we deal with that. You mentioned the sums for
Speaker 1: adaptation and mitigation for the developing countries. That was one
Speaker 1: aspect of this agreement that certainly felt short and for
Speaker 1: many who were there through all of the negotiations left
Speaker 1: a kind of bitter taste in their in their mouths,
Speaker 1: because it felt that it seemed too many that very
Speaker 1: little progress have been made in really offering developing countries
Speaker 1: a path two develop as well as be part of
Speaker 1: this climate action. Do you understand those who felt disappointed
Speaker 1: by what came out of it, the lack of actual
Speaker 1: money on the loss and damage and the failure to
Speaker 1: even meet the hundred billion dollar target, which you've admitted
Speaker 1: was is nothing in the scheme of things of what's
Speaker 1: going to be needed. Well, look, let me let me
Speaker 1: be more Stephanie. I'm glad you asked the question because
Speaker 1: I really wanted to tackle that. You know, the hundred
Speaker 1: billion was a goal. It's become a target, but it
Speaker 1: was a goal. It was pulled out of the air
Speaker 1: by Gordon Brown. I think in Copenhagen Uh. Where they
Speaker 1: were trying to find agreement and and they decided to
Speaker 1: be a hundred billion. We accepted that in Paris when
Speaker 1: we negotiated it. But as I said, it was the
Speaker 1: goal of a hundred billion. When I took this job on,
Speaker 1: we were at sixty seven billion for the year. Uh
Speaker 1: excuse me, And um, that's the first year the Biden
Speaker 1: administration could step up, Folks. A guy named Donald Trump
Speaker 1: cut all the funding, and a guy named Donald Trump
Speaker 1: pulled out of the agreement. And so when Joe Biden
Speaker 1: became president, the first budget he is in front of
Speaker 1: them is that budget we're working on right now. And
Speaker 1: we put eleven point four billion into that, doubling the
Speaker 1: already doubling that Joe Biden had engaged in. Even as
Speaker 1: we're trying to get our own country back on track
Speaker 1: and do the things we need to do to get
Speaker 1: the job done. We've had, we've accepted a fifty production.
Speaker 1: We are legitimately on track to keep one point five
Speaker 1: degrees alive. And I personally which more energy was spent
Speaker 1: focusing on some of the countries that didn't submit in
Speaker 1: d c s or folks and big countries, and focusing
Speaker 1: on the countries that are not on a one point
Speaker 1: five track, but indeed are going to be uh, you know,
Speaker 1: putting more emissions into the into the atmosphere over the
Speaker 1: course of the next number of years. So the reality
Speaker 1: is we got up to nine to ninety seven billion
Speaker 1: according to the o E c D for next year,
Speaker 1: and if we can come pleat the budget that we
Speaker 1: have coming in, then we'll be over the hundred billion
Speaker 1: for next year. So we are making good in the
Speaker 1: first year that we have an opportunity need to do
Speaker 1: something with the budget. In addition, loss and damage does
Speaker 1: not even have been accepted at a major part of
Speaker 1: the agreement that we accepted the idea that it is
Speaker 1: important to deal with and that we do have to
Speaker 1: have a dialogue. But look, if we don't want to
Speaker 1: shut the entire United States Congress down on putting money
Speaker 1: into climate, we can't accept the opening of the liability
Speaker 1: which is going to tie up the courts and the
Speaker 1: structure and not get the money we need for adaptation
Speaker 1: and resilience. So we really ought to be putting more
Speaker 1: effort into adaptation and resilience where we are doubling the money.
Speaker 1: But the bigger issue, folks, is not a hundred billion dollars.
Speaker 1: That's peanuts compared to what we have to be doing here.
Speaker 1: And the fact is that we went to the top
Speaker 1: banks in the United States. I personally engage with Goldman Acts, Morgan, Stanley,
Speaker 1: well Spargo, City, uh JP, Morgan, Bank of America, and
Speaker 1: those six banks have committed that over the next ten
Speaker 1: years they're prepared and will invest four point one six
Speaker 1: trillion dollars in this transition. In addition, Larry Fink at
Speaker 1: black Rock says he's going to put at least a
Speaker 1: trillion in and and others will. And there's a Global
Speaker 1: Finance Alliance which Mark Karney has has been working with,
Speaker 1: which has tens of trillions allegedly of additional money. We
Speaker 1: have to find a way to deploy that money. That
Speaker 1: money is not giveaway, it's not concessionaire, it's ready to invest.
Speaker 1: So countries bear responsibility to also step up and make
Speaker 1: sure that they have the transparency and the contracting and
Speaker 1: the p p a s and the ability to be
Speaker 1: able to make those trillions into deployable investment bankable money.
Speaker 1: You know as well as I do that a lot
Speaker 1: of the money that's needed is needed in developing countries,
Speaker 1: and there's no commitment from those big financial institutions to
Speaker 1: take the money to where it's going to be really needed.
Speaker 1: If you're if you were Prime Minister Modi, we had
Speaker 1: a rather probably what you would consider a minimum commitment
Speaker 1: from India at the cop But if you were Prime
Speaker 1: Minister of India, would you have said anything different? Have
Speaker 1: you been given any reason by the rest of the
Speaker 1: world to be more ambitious in your domestic target when
Speaker 1: you're also looking at a new to developing I understand
Speaker 1: Prime Minister Money. I've met with them several times this year.
Speaker 1: We formed a partnership to help India be able to
Speaker 1: deploy at four hundred and fifty gigawatts of renewable power,
Speaker 1: and we've agreed to bring finance and technology to the table.
Speaker 1: We will need India's governmental help to be able to
Speaker 1: make sure that the land is available either lease or sale,
Speaker 1: that the transmit lines can move across one state to
Speaker 1: another UH and obviously this is a two way street
Speaker 1: to some degree. But in addition to that, yeah, we
Speaker 1: have foreign assistance programs. We have the Development Finance Corporation,
Speaker 1: which will have several billions of dollars that it is
Speaker 1: already currently financing projects in less developed countries around the world.
Speaker 1: But the real fight here, folks, let's we're gonna be
Speaker 1: real about this. We we have been a leading nation
Speaker 1: in consistently assisting other countries to develop. But figure, please
Speaker 1: focus on this. Twenty countries equal of all the emissions.
Speaker 1: They're basically your g twenty though not exclusively those those
Speaker 1: twenty countries, they're the greatest responsibility for helping to solve
Speaker 1: this crisis right now. And the fact is that no
Speaker 1: country really accepted as included that this was a genuine
Speaker 1: crisis until when we all went to Rio and formed
Speaker 1: the process by which we now meet every year for
Speaker 1: twenty six years. But the truth is a lot of
Speaker 1: countries decided to grow with coal, not with nuclear, not
Speaker 1: with gas, not with other alternatives. And coal is the
Speaker 1: primary culprit today in warming the planet and in polluting
Speaker 1: the air, and in creating the intensity of the storms
Speaker 1: that comes with the increased moisture that rises from the oceans.
Speaker 1: And we have to start where the greatest amount of
Speaker 1: emissions are if we're going to win the battle. So
Speaker 1: if more than of those twenty countries are now committed
Speaker 1: to a one point five degree track. And what we
Speaker 1: have to do is go to the countries where the
Speaker 1: greatest amount of emissions are and begin to reduce the
Speaker 1: greatest amount of missions the fastest we can, as fast
Speaker 1: as we can, and and that means China, Russia, India, Mexico,
Speaker 1: South Africa, Brazil. You know a group of country Indonesia,
Speaker 1: and those are the countries we've been doing climate diplomacy with.
Speaker 1: South Africa has accepted a new plan. But we have
Speaker 1: to all of us be able to put the deals
Speaker 1: together that will that will phase out their coal fast
Speaker 1: and provide the alternative renewable energy. The truth is that
Speaker 1: if India were to deploy the fifty gigawatts of renewable energy,
Speaker 1: then India's in compliance with one point five degrees. So
Speaker 1: this can happen. It will take all of us working together.
Speaker 1: You talked about the importance of US leadership here, which
Speaker 1: is clear. Commitments to this agenda didn't used to be
Speaker 1: a partisan issue in the US, but it sure is now.
Speaker 1: If you looked at the polls, if you look at
Speaker 1: the recent election results in Virginia and elsewhere, you would
Speaker 1: say the Democrats are overwhelming underdogs for next year's election,
Speaker 1: and at this point for the next presidential election. Why
Speaker 1: should the rest of the world believe this leadership is
Speaker 1: going to continue beyond the next two or three years
Speaker 1: in this crucial period for the very simple reason that
Speaker 1: the marketplace is going there, whether the government does or not.
Speaker 1: This is going to be a global revolution, and I
Speaker 1: believe that transformation is going to be so far. Look,
Speaker 1: General Motors and Ford Motor Company have already announced they're
Speaker 1: gonna only produce electric cars by by They're gonna have
Speaker 1: fifty of their cars are going to be produced our elector.
Speaker 1: So I'm just telling you you think they're going to
Speaker 1: spend hundreds of millions of dollars retooling those plants for
Speaker 1: electric and then turn around because some politician comes in
Speaker 1: and wants to deny science. Again. No, what we're doing
Speaker 1: in the United States has nothing to do with politics
Speaker 1: and ideology. It has everything to do with mathematics and physics.
Speaker 1: And if you understand mathematics and physics and you believe
Speaker 1: the science, this is gonna happen because it's gonna happen
Speaker 1: in all the rest of the world, and the United
Speaker 1: States is not stepping up to say, hey, we're the
Speaker 1: leader here. This is everybody's got to be leaders here.
Speaker 1: Everybody's gonna step in together. But we are here to
Speaker 1: make up for the deficit of a guy who didn't
Speaker 1: understand science and didn't have any economic rationale and who
Speaker 1: pulled out of the Paris Agreement and hurt the world
Speaker 1: in doing that. And we don't have any time for that.
Speaker 1: So we're gonna come back. We're gonna do everything in
Speaker 1: our power because our citizens are as exposed as citizens
Speaker 1: everywhere else in the world. I mean, if, if, if,
Speaker 1: if leaders don't grab onto this baton, they're gonna get
Speaker 1: thrown out because the public understands what's happening and they're
Speaker 1: demanding action from all of us. So I believe no
Speaker 1: politician in four is going to step up. And besides,
Speaker 1: it's way too premature to be making any speculations about
Speaker 1: I can't believe what's going on. Prison Biden is going
Speaker 1: to pass his next piece of legislation, and together with
Speaker 1: his infrastructure bill, that's gonna put about two trillion plus dollars,
Speaker 1: much of which is going to go to climate action
Speaker 1: in the United States. And even while Donald Trump pulled
Speaker 1: out of the agreement, the vast majority. Thirty seven governors
Speaker 1: in the United States, Republican, the Democratic like continued to
Speaker 1: stay in the Paris Agreement. Over a thousand mayors continued
Speaker 1: to stay in the Paris Agreement. And they you know,
Speaker 1: as I say, America's stayed in that agreement. And and
Speaker 1: fully ninety of the new energy being brought online around
Speaker 1: the world today is online because of renewables. This is
Speaker 1: happening without government. It's happening because the marketplace has made
Speaker 1: a decision. That's where we have to go. And with
Speaker 1: disclosure and and trading mechanisms and pricing of carbon and
Speaker 1: see bam coming at us. Believe me, folks, Uh, no
Speaker 1: one politician can undo what is about to happen. Well,
Speaker 1: that's an emphatic note on which to begin our final
Speaker 1: day of deliberations. John Kerry, Special Presidential Envoy for Climate,
Speaker 1: thank you very much for joining us. I have to
Speaker 1: do really so I wanted to stick with the same
Speaker 1: theme to pick up on some work that Bloomberg Economists
Speaker 1: have done on the economic implications of climate change, with
Speaker 1: one of the authors, Eurozone economist Mayva Kuza, friend of
Speaker 1: the podcast Neva. So you're basically thinking through you know
Speaker 1: what the kinds of things that we hear about. It's
Speaker 1: a cop tow any six in Glasgow. Where countries are
Speaker 1: making commitments very close short term or longer term commitments
Speaker 1: to decarbonize, you know, inherent in that commitment is the
Speaker 1: idea that carbon prices carbon, the price of carbon in
Speaker 1: the economy is going to get higher, that we're going
Speaker 1: to stop subsidizing all these fossil fuels. And what you're
Speaker 1: looking at is the these various estimates of how that
Speaker 1: rise in the carbon price is going to feed through
Speaker 1: to the general level of prices and certainly the general
Speaker 1: um rate of inflation. So when when you step back
Speaker 1: from that research, do you think that the kind of
Speaker 1: price hikes and mad variation in the cost of energy
Speaker 1: that we've seen recently that's going to be much more
Speaker 1: common in the future as we have these various different
Speaker 1: rates of carbon. That's going to get much more common
Speaker 1: as we have these efforts to decarbonize. So it will already,
Speaker 1: I would say that it really depends on how old
Speaker 1: only old disorder transition is. First, if you can imagine
Speaker 1: a case where globally we um countries and policy makers
Speaker 1: agree on a relatively well settled price for carbon. Then
Speaker 1: it's easier for producers to plan ahead. It's probably easier
Speaker 1: for inflation expectations to adjust as well, and you would
Speaker 1: have this initial potential increase in producer prices, but it's
Speaker 1: probably going to be much smoother if, in contrast, you
Speaker 1: have something where from one year to the next we
Speaker 1: can have very large changes in um carbon taxis, carbon prices,
Speaker 1: carbon regulations, and there's less time to adapt than I
Speaker 1: think the impact on prices is going to be bigger.
Speaker 1: And in addition, it's also a question of how prepared
Speaker 1: the energy system is to the new regulations. We know that,
Speaker 1: for instance, renewable energy tend to be maybe more volatile
Speaker 1: volatile in their production, and as long as there is
Speaker 1: this sort of backup coming from more higher fuel intensive,
Speaker 1: in emission intensive products they call, for instance, which would
Speaker 1: cost a lot in the world with higher carbon prices,
Speaker 1: then it would increase massively the cost of production if
Speaker 1: renewable drops for a temperate period, and that will increase
Speaker 1: sort of volatility of energy inflation. And I think one
Speaker 1: thing that is important to consider as well is that
Speaker 1: not only it will affect inflation, it would increase inflation,
Speaker 1: but it's also as a place, so it would reduce growth,
Speaker 1: it would reduce economic activity. And so for central box
Speaker 1: you can have this sort of um much more volatile inflation,
Speaker 1: higher on average, and the trade off with supporting the economy,
Speaker 1: and different sample box will probably see this trade off differently.
Speaker 1: Some may look fruit the pacing crazies and we have
Speaker 1: higher inflation and mostly brought for crave. Some may actually
Speaker 1: decide that they need to takeen policy to high in
Speaker 1: inflation at the expense of the could activity. I guess
Speaker 1: you've seen a little sort of dry run for some
Speaker 1: of this where people are blaming efforts to combat climate
Speaker 1: change for the spike in energy prices that we've seen.
Speaker 1: And if we get the kind of variability of inflation,
Speaker 1: the impact on growth that you've just talked about coming
Speaker 1: down the track causing challenges for central bankers also as
Speaker 1: a result of combating climate change, you know that could
Speaker 1: that could make for some quite difficult politics as well
Speaker 1: as decisions for central bankers. Yes, definity, and we've seen
Speaker 1: that even increasing um energitects. For instance, we've seen in
Speaker 1: France the religion par days that it's actually difficult. It's
Speaker 1: so it tends to be energic, existance to be regressive,
Speaker 1: so they tend to affect poor people more, and that's
Speaker 1: always a very difficult political um political choice to make.
Speaker 1: The recent increase we've seen in energy prices is a
Speaker 1: combination of some very unusual renewable poor production from renewable
Speaker 1: which we may see the wind not blowing exactly as
Speaker 1: the remaking more if we rely more on renewable, plus
Speaker 1: potentially if the climate system becomes more unusual as well.
Speaker 1: But it's also a direct impact from the supplying negg.
Speaker 1: It's supply bottom example, you sink for the pandemics, so
Speaker 1: it's some of them. It's a bit of both. But
Speaker 1: in any case, it's clear that the policy choices that
Speaker 1: we have to be made in terms of UM, both
Speaker 1: at the same time driving the tradition but also making
Speaker 1: the adjustments UM and supporting the parts of the go
Speaker 1: to mean that needs to body will be quite a
Speaker 1: difficult challenge for for policymakers. And it's not a part
Speaker 1: that part of the money UM from the Yobian Union
Speaker 1: as part of their Andrew beck Age is on the
Speaker 1: just position from for instance, because that's some things that
Speaker 1: are already very aware. Yeah, the just transition, so making
Speaker 1: sure that it doesn't just involve hiking the price of
Speaker 1: energy and having it effect lower income households worse worse
Speaker 1: than others. Um that's clearly is a very important piece
Speaker 1: of that, maybe, Causina, thanks so much. Thank you. That's
Speaker 1: it for this episode of Stephanomics, but do follow at
Speaker 1: Economics on Twitter for a lot more news and analysis
Speaker 1: from Bloomberg Economics. This episode was produced by Magnus Hendrickson,
Speaker 1: with special thanks to John Kerry Maybel Cuzin, Karen and Look,
Speaker 1: Claudia Madler, and Catherine Bosley. Mike Sasso as executive producer
Speaker 1: of Stephanomics and the head of Bloomberg Podcast is Francesco
Speaker 1: Levy m h M.